(1) Where the tax base on the income of a domestic corporation for each business year includes any foreign source income, and the amount of foreign corporate tax prescribed by Presidential Decree on such foreign source income (hereafter in this Article and Article 73, referred to as "amount of foreign corporate tax") has been paid or is payable, the amount of foreign corporate tax may be deducted by up to the amount (hereafter in this Article, referred to as "deduction limit amount") computed by the following formula from the amount of corporate tax for the relevant business year: <Amended on Dec. 22, 2020; Dec. 21, 2021; Dec. 31, 2022>Deduction limit amount = A ? B/CA: Calculated tax amount for the relevant business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax calculated by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Restriction of Special Taxation ActB: Foreign source income (excluding the amount calculated by multiplying the ratio of tax exemption or reduction on tax-exempted foreign source income, where a tax exemption or reduction is granted under the Restriction of Special Taxation Act or any other statute.C: Tax base on income for the relevant business year.
1. Deleted; <Dec. 31, 2022>
2. Deleted; <Dec. 31, 2022>
3. Deleted. <Dec. 31, 2022>
(2) In applying paragraph (1), where the amount of foreign corporate tax exceeds the deduction limit paid or payable to a foreign government for the relevant business year, such excess may be carried forward to each business year ending within 10 years from the start date of the business year following the relevant business year (hereafter in this Article referred to as "carry-over deduction period"), and may be deducted up to the deduction limit amount for each business year in which it is carried forward; provided, where a foreign corporate tax paid or payable to a foreign government is not deducted within a carry-over deduction period, the amount of the foreign corporate tax that has not been deducted may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the day following the end of the carry-over deduction period of falls, notwithstanding subparagraph 1 of Article 21. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020>
(3) An amount equivalent to the amount of the corporate tax reduction or exemption granted to a domestic corporation having foreign source income in a country which is a party to a tax treaty shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1), within the limits stipulated by the relevant tax treaty. <Amended on Dec. 22, 2020>
(4) Where the amount of income of a domestic corporation for each business year includes dividends or distribution of surpluses from a foreign subsidiary (hereafter in this Article, referred to as "dividend income"), the amount of foreign corporate tax imposed on the amount, computed as prescribed by Presidential Decree, that is equivalent to the dividend income, among the amount of foreign corporate tax on the foreign subsidiary's income, shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 31, 2011; Dec. 22, 2020>
(5) "Foreign subsidiary" referred to in paragraph (4) means a foreign corporation that meets the requirements prescribed by Presidential Decree, in which a domestic corporation invests at least 10/100 (or 5/100 in cases of a foreign corporation that engages in the business of developing overseas resources under Article 22 of the Act on Restriction on Special Cases concerning Taxation) of its total number of outstanding voting stocks or total amount of investment. <Amended on Dec. 23, 2014; Dec. 31, 2022>
(6) Where the amount of income of a domestic corporation for each business year includes the dividend income from a foreign corporation and the investor domestic corporation, not the relevant foreign corporation, has a direct tax liability for the income of the foreign corporation or otherwise meets the requirements prescribed by Presidential Decree, the amount computed, as prescribed by Presidential Decree, which is equivalent to the dividend income out of the amount of foreign corporate tax imposed on the investor domestic corporation shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 22, 2020>
(7) Paragraphs (1) through (6) shall not apply to income dividend subject to exclusion from gross income pursuant to Article 18-4. <Added on Dec. 22, 2022>
(8) The method for calculating foreign source income, tax credits, or inclusion of foreign source income in deductible expenses under paragraphs (1) through (6) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Jan. 1, 2013; Dec. 31, 2022>[This Article Wholly Amended on Dec. 30, 2010]